What’s happening in your market in terms of sales, product lines, innovations, distribution channels, advertising, pricing, and so forth? Who are the key players that you should be watching? Are there any potential threats on the horizon, such as legislative changes or new entrants to the marketplace, which you need to address?
Competitive intelligence is all about gathering information about your customers, competitors and the other external factors that affect your business – i.e. the answers to the questions posed above – in order to obtain a competitive advantage in your marketplace. This data about external factors is then combined with internal data about your own business to aid in strategic decision making.
The first step in conducting competitive intelligence is identifying your key competitors.
- Where to find this information? – If you do not already have a list of key competitors there are a multitude of places where you can start. Google Search, Industry publication, local publications (we get the Book of Lists from Orange County Business Journal), and even LinkedIn groups. Make sure that you are not only looking for the big players – sometimes the small companies are the ones making big moves.
The second step is then collecting key information about them.
- Where to find this information? – For publicly held companies you can review annual reports to obtain information about number of employees, dollars spent on research and development activities, new products in the pipeline and more. For both publicly held and privately held competitors you can read articles and blogs to learn about product development launches, office moves, new employees, marketing spend and more.
Three competitive intelligence tactics
Once you identify your key competitors and have information about them, three common ways to analyze this data are Benchmarking, SWOT Analysis and Scenario Planning. Here are some examples of how each might be used:
SWOT Analysis – Once you have a better understanding of what your competitors are doing you are able to conduct a SWOT analysis. This is used to identify the key internal and external factors that impact a business’ ability to achieve its objectives. Here is a sample SWOT:
Benchmarking – Benchmarking is defined as comparing one’s business processes and performance metrics to industry bests or best practices from other industries. Benchmarking goes beyond just comparing your business to all your competitors – it involves determining best practices and then measuring how your business compares against them.
- The key steps for benchmarking include identifying which key metrics you want to measure and then determining who to compare yourself to.
- Remember to not only look within your own industry when looking for other firms to compare yourself to. While it is important to compare yourself to others within your industry you may be missing out on other unique best practices if you only stay in your industry.
Scenario Planning – Scenario planning is helpful for gauging the potential results of initiatives that a company is considering implementing or potential reactions to things that they might do in response to their competitors’ moves. Once you’ve identified potential problems or potential changes, you can use scenario planning to think through “what if” these things actually happened.
- One area where this makes the most sense is to start with your weaknesses. In the example above, if a company has a limited number of distribution centers, it might be helpful to ask the questions – What if we had a distribution center on the East Coast? What would it cost? How would it impact their delivery times? How would it help sales? How would it help them be more competitive? Etc.
How are you using competitive intelligence?
How often does your company gather competitive intelligence? How do you use this information? Please share your insights by leaving your comments below.